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Immoral behavior: signs, causes, types, differences in different countries. Ethical behavior of employees

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To identify the essence of a problem means to conduct a meaningful analysis of it and understand the system of main contradictions. Identifying the essence of problems requires knowledge of the functional and aggregate structure and values of the parameters of the control object during its normal functioning. “When we formulate problems or discuss them, we always thereby form a certain program and plan of our actions.” We always evaluate and select problems, characterizing some of them as very important and significant, and others as unimportant. Thus, we determine and predetermine our future actions.

One of the problems of journalism is the “yellow press,” which spoils the reputation of the profession as a whole, but despite all this, it is one of the most read. Then the thought involuntarily arises that it is not the press that is to blame, but the reader, who himself is ready to pay money for such information, “for every viewer there is an actor, and for the consumer there is a product.” “People have a right to know,” but the form in which they find out also matters. great importance. The problem here is that if you simply state the facts, then the journalist will not be visible, but if you embellish the events so much, then there may be nothing left of the fact, but only the distorted fantasy of the journalist. Indeed, the work of a journalist is an act of indirect communication with readers, radio listeners, and television viewers. This is a communicative act.

Information is an intermediary between a journalist and an audience; it is a tool used by journalists of all ranks. The very essence of journalism is the search, collection, processing, interpretation and dissemination of information.

Some actions of journalists violate not only the Code of Professional Ethics, but also laws, so the newspaper “Komsomolskaya Pravda” published an article entitled “The Secret Diary of Mikhail Kozakov: I gave my wife Anya everything I earned!” And you can’t trust her about anything!” which included excerpts from the artist’s personal diary (Appendix B). This publication violates the twenty-third article of the constitution Russian Federation- "1. Everyone has the right to privacy, personal and family secrets, protection of their honor and good name. 2. Everyone has the right to privacy of correspondence, telephone conversations, postal, telegraph and other messages. Restriction of this right is allowed only on the basis of a court decision,” also article twenty-four, paragraph one - “Collection, storage, use and dissemination of information about the private life of a person without his consent is not permitted.” We conducted a survey (Appendix D, survey No. 1) in which we asked the question “in your opinion, can the behavior of the journalist(s) who published excerpts from the diary of People’s Artist of the RSFSR Mikhail Mikhailovich Kozakom be called unethical?” 50% of respondents considered the behavior of journalists unethical and illegal, 28.57% considered it unethical, but not violating the laws, and 21.43% of respondents considered the behavior of journalists acceptable.

There are journalists who happily try on the role of the arbiter of human destiny, so journalist Alexander Nikonov, in the program “clinch”, radio station “Echo of Moscow”, stated that “extra people need to be killed.” An extra person, in his opinion, is one who cannot take care of himself, cannot support himself. The word euthanasia is used as a cover, but decency must still be observed: murder is bad, but euthanasia is humane. Nikonov lives with the confidence that such things as love and pity do not exist. Or rather, they were simply invented. It is impossible to rationally explain pity and love - this means that they do not deserve the right to exist, just like disabled children. Sick children are saved by their mothers. After all, they are driven by maternal instinct, and this is unconscious, at the level of instincts, so to speak. So we need to help them realize that they are mistaken. From his point of view, they will only say thank you later.

We conducted a survey (Appendix D, survey No. 2) in which we asked the question “Do you think Alexander Nikonov’s statement “about the use of euthanasia for disabled children immediately after birth” can be called ethical? and 18.92% considered it ethical, 51.35% considered Nikonov’s statement unethical, and 29.73% considered the behavior unethical, but taking place, since every person has the right to express his point of view.

Some journalists do not even hesitate to bury living and healthy people, The news about the death of Jackie Chan became one of the most read on the Internet (Appendix E) On March twenty-eighth, 2011, in social networks and Internet news reported that the famous actor Jackie Chan had died. Fans began to express their condolences on Facebook, but it turned out that the actor was alive. The rumor about Jackie Chan's death from a heart attack was launched through the microblogging service Twitter 10 days before the Actor's 57th birthday.

We conducted a survey (Appendix D, survey No. 3) in which we asked the question “Do you think it was ethical to distribute unverified information about the death of Jackie Chan on the Internet?” Most of the respondents, 85.71%, believe that this is unethical, but there were people who had the opposite opinion (14.29%). We were also interested in how the artist’s fans think who could have spread such rumors (Appendix D, survey No. 4); according to the survey, it turned out that the majority of respondents, 39.28%, believe that this could have been done by people who wanted to make money by disseminating this information or simply to attract attention, 25% of respondents thought that these were the artist’s enemies and ill-wishers, and 17.86% each received the following answer options: This is just a thoughtless joke, this could have been done by the artist’s PR people to attract attention to him.

The surveys we conducted helped us find out people's attitudes towards this species information. The majority of respondents, relying on their moral principles, believe that, in general, in these situations, journalists acted unethically in relation to the heroes of their articles. But if we imagine that all journalists acted as prescribed in the code of journalists, would this profession be so interesting? And wouldn’t a situation of information starvation arise then? Transgressing the bounds of decency is wrong, this is well known, but in our world of double standards, other journalism cannot exist.

By doing this, managers take risks and get the organization into trouble because they believe that their (unethical) behavior is in the best interests of the organization or the individual. Reason

However, business ethics concerns not only the issue of socially responsible behavior. She's focused on wide range behavior options of managers and managed. Moreover, the focus of her attention is both the goals and the means used to achieve them by both. For example, almost all Americans are likely to believe that it is unethical to bribe a foreign official to obtain a contract. In this case, the means are unethical. Let us imagine, however, that we are talking about a contract for the purchase of seal skins used for the production of clothing. Some people who value the protection of wild animals may consider it unethical to use seal skins, even if they can be obtained without paying a bribe. Here, the goal is considered unethical because such actions are seen as wrong behavior. From this point of view, behavior is wrong not because it is illegal, but because it is contrary to personal values and is an action that cannot be supported. As another illustration, many people consider it unethical for companies to do business with South Africa due to that country's apartheid policies. The opinions of these people are the result of actions by the South African government that violate people's value ideas about how individuals are treated in society.

In addition to senior managers who often exhibit unethical corporate behavior, anyone in an organization can also act unethically. Consider the following situations. You are a purchasing agent and one of the suppliers with whom you do business offers you a case of good wine. Should you accept it?

According to research data from the mid-70s. About 2/3 of the 500 largest American companies have engaged in some form of illegal behavior. Public opinion polls have shown that commitment to ethical behavior in the United States is falling in the general public's opinion. According to one poll, 65% of Americans believe that the country's overall ethical standard has declined over the past decade. Only 7% of Americans believe it has increased. When asked about the most common types of unethical business practices, the head of one of the financial institutions said Bribes, forgery, false financial statements, artificially inflating prices, secret price collusion. Another study, covering a 15-year period, found that business executives are more cynical about management ethics in general than they were 15 years ago.

TRAINING ETHICAL CONDUCT. Another approach that organizations use to improve ethical behavior is training ethical behavior for managers and employees. In doing so, employees are made aware of business ethics and sensitized to ethical issues that may arise before them. Integrating ethics as a subject into business courses at the university level is another form of teaching ethical behavior that helps students develop a better understanding of these issues. According to a study by the Center for Business Ethics, corporations are much more concerned about ethics today than in the past, and have taken concrete steps to integrate ethics into their practices. At the same time, daily newspapers are replete with examples of unethical and illegal behavior of employees of organizations of any type; however, we believe that organizations themselves do not lack counterexamples of ethical actions of their employees. By continuing to implement the various programs and practices described above and by ensuring that high-level leaders serve as role models of appropriate ethical behavior, organizations should be able to raise their ethical standards.

What do you think are the reasons for the recent trend of unethical behavior?

The unethical behavior of individual auditors deserves reproach and punishment, including exclusion from the community of auditors, deprivation of a qualification certificate and a license to conduct auditing activities.

Unethical marketing, price fixing, bribery, false advertising, and unsafe products are causing increasing concern in society. Most likely, this concern is due to the fact that marketing activities are in the public eye. The impact and opportunities provided by the field of marketing management are such that marketing may still be the source of the greatest number of business disruptions. Unethical marketing does not benefit from any argument about ethics in business. Such marketing is an unethical activity that ultimately leads to bankruptcy of a company or individual entrepreneur. In addition, unethical marketing creates a negative image of the company. It is the basis for deviant behavior and as a result leads to organizational dysfunction. Bribery, for example, harms consumers and competitors who have nothing to do with it. A similar situation arises when a dishonest seller can increase his commissions by deceiving buyers. If these activities are not detected and punished, they benefit the individuals engaged in them, and perhaps their companies, at the expense of others and economic systems.

It is important to consider the consequences that may result from ignoring ethical standards or engaging in unethical behavior. In the long term, a company's shareholders are likely to act to punish the firm for unethical marketing, and consumers, for example, may turn to other companies. In the short term, it is also possible for a company to ignore ethical standards. And the more such ignorance spreads, the faster legitimate opposition can be found. It is likely that companies that conduct business in accordance with the cannibal principle of eating your own kind instill in their employees the same attitude towards the company itself and towards each other. Therefore, following ethical standards is the basis of a successful business.

Human rights. The principle of human rights is based on the premise that a person or group of people has a right to something or is entitled to be treated properly. A decision is considered unethical when it violates human rights. This principle places mutual respect at the forefront, even if we disagree with someone or don't like someone. This ethical concept makes one value the individual. A violation of human rights, and therefore unethical behavior, is the activity of a trade union that does not recognize the right of a group of female employees to apply for any job in accordance with their qualifications. Another example is that a company is involved in thoughtless dumping of hazardous waste. A company may be guilty of ignoring the rights of others by exploiting the environment for selfish purposes.

Organizational relations. Market participants need to be aware of how their behavior may affect the organizational behavior of others. They must not exert pressure or use coercion that could lead to unethical behavior towards others, such as company employees, suppliers or customers. At the same time they must

What progress have you made in this exercise? Perhaps for the first time you asked yourself the question about the motives and goals of your actions. At this point, I intend to give you a basic understanding of how you can develop behavioral flexibility. As a development professional, I believe it is unethical to force change or manipulate people. Change only happens when people themselves want change.

Nevertheless, unethical behavior also has its benefits, and its danger is that the spread of unethical behavior leads to a decrease in the so-called ultimate morality, which is understood as the lowest level, the boundary of ethically acceptable and practiced behavior. When this marginal morality falls as a result of the increasing prevalence of unethical behavior patterns, pressure arises on the individual entrepreneur (entity) to adapt to the falling marginal morality in order to avoid a deterioration in his competitive position.

In the third case, the individual understands that everyone will benefit if the rules are universally followed, but for himself he considers the best model unethical behavior. The third case precisely illustrates a problem that, with the development of a market economic system, is becoming increasingly acute - with the free-rider problem mentioned above. The moral free-rider problem is that individuals want to enjoy the benefits of a moral state without sharing its costs in limiting unethical incentives. In other words, each individual is interested in ensuring that everyone follows the rules and that the common good of the entire group is realized, but each individual is tempted to make an exception for himself from these rules.

Groupthink occurs in organizations when groups prioritize their own, contrary to generally accepted norms, if it leads to benefits for their organization, this in turn encourages employees of the organization to commit or support unethical actions. Groupthink occurs in organizations and groups that deliberately engage in unethical behavior, when the group is cohesive, when its leader advocates unethical decisions or ideas, and when the group does not have internal controls to ensure ethical behavior. A significant contributor to unethical decisions is the desire of group members to gain approval from other members and the leader. In such situations, the group takes unethical actions and rejects any opinion that does not coincide with the goals of the group and its leader. Another primary symptom of groupthink is avoiding the need to defend one's position. This happens when the group leader receives social support from his advisers, who agree with his opinion and participate in finding reasons to justify the most dubious decisions.

Ethics not only touches on the issue of social responsibility, but should also be considered in a wide range of options - the behavior of managers and subordinates. Moreover, both the goals and means used in management must be assessed from an ethical standpoint. Thus, if a trading company, in pursuit of high profits, builds its strategy on selling expensive imported goods of dubious quality to the population, then it not only violates legal norms, but also abdicates social responsibility by demonstrating unethical corporate behavior. Inside such a company, among the managers and

However, moral and ethical standards are not always observed in the relationship between the seller and the buyer. Sometimes there is a possibility that a product is misrepresented. This is a fairly common case, especially in the retail industry, where a product is advertised as having a number of specific properties and, due to this, as well as its relative cheapness, sells quickly. When his stock runs out, the seller tries to convince the customer to buy a more expensive product. This type of unethical behavior has a name - bait and hook. Once the customer has taken the bait, the salesperson works hard to convince the customer to purchase another product, which usually costs more.

However, not every example of generally accepted unethical behavior in marketing is illegal. Marketers often have to make legal decisions that may not be ethical. There are matters to which the law has not yet reached or for which, because of their complexity or because of the uncertainty of what is right in any particular case, the law cannot or will not prescribe anything. For example, price gouging is generally not illegal, but is often considered unethical. In many countries, the law does not prohibit television advertising to children, and yet it, too, is often criticized for being immoral. Such gray areas, where behavior may be legal but unethical, or where law and ethics do not provide clear guidance, often pose significant challenges to both scientists and practitioners.

Contact any level of manager regarding any issue, including issues such as violations of the law or unethical behavior.

We will respect the professional reputation and practice of other management consultants. This does not remove the moral obligation to expose the unethical behavior of our colleagues and bring it to the attention of the authorities.

The community of auditors as a whole and each auditor individually condemn the unethical behavior of individual auditors and demand their punishment, including exclusion from their environment, deprivation of a qualification certificate and a license to conduct auditing activities.

Actions of managers or ordinary employees that violate the law should also be regarded as unethical. For example, E.F. Hutton was found guilty of forging 2,000 postal and telegraphic items, i.e. in an act that clearly violates the law. It's right. However, actions that do not violate the law may or may not be considered unethical depending on the different value system. Let's imagine the situation with the withdrawal of Tileno-la capsules from sale by Johnson & Johnson. For the most part, people should consider this action ethical. Some must consider Ford Motor Company's behavior unethical because it objected to the withdrawal of the Pinto or redesign of the fuel system to eliminate possible hazards associated with the gas tank.

Among the reasons for the expansion of unethical business practices, business leaders include 1) competition, which pushes ethical considerations to the margins; 2) an increasing desire to indicate the level of profitability every 3 months, i.e. in quarterly reports 3) failures to ensure that executives are properly rewarded for ethical behavior 4) general decline the importance of ethics in American society, which gradually excuses unethical behavior in the workplace 5) pressure from the organization on ordinary workers in order for them to find a compromise between their own personal values and the values of managers. This latter reason is supported by a study conducted more than 20 years ago, which found that the behavior of their managers had a major influence on employees' unethical decisions. In a broad sense, what the master does and how he behaves is the main factor influencing the behavior of the subordinate. Thus, by behaving ethically, you as a leader can significantly influence the ethical behavior of your subordinates.

The idea of ethical behavior in business is also to protect the company from attacks by unethical employees and competitors. High ethical standards also protect employees. If people work in a highly ethical company, the company's attitude towards them in terms of honesty and dignity will be compensated by the high ethical level of the workers themselves and increased productivity.

It may seem that the Mandeville paradox of private vices - public benefits makes ethics redundant, since, as already noted, unethical behavior leads to a socially useful result, leading to an increase in social wealth and well-being. In addition, there is an opinion that market participants are not required to behave ethically also because it is assumed that the very pressure of competition will force them to economically, correct actions, which are identical to ethically correct actions. In other words, external competition sufficiently forces entrepreneurs to behave efficiently and honestly within and outside the enterprise, since otherwise there would be an outflow of workers to other employers and buyers to other sellers.

Third, there is also a type of ethical behavior such as refusing to gain competitive advantage and economic profit by taking advantage of a morally dubious opportunity, unethical behavior or breaking rules. In this case, the Cost for the entrepreneur represents a lost opportunity, since he misses out on additional income by refusing to do something unethical, i.e. behavior contrary to duty and rules2. Ethical behavior here consists of renouncing public evils (for example, bribery) at the expense of renouncing private enrichment. There is also an economic incentive not to produce social evil; the enterprise is interested in ensuring that bribery does not become a common practice and that it itself does not become its victim3."

Unfortunately, each of us can rationally justify immoral behavior. We may convince ourselves that such actions are acceptable. The best way prevent immoral actions - recognize that this justification is based on flawed and self-serving logic. It's Helpful to Be Armed with Four Common Reasons to Excuse Unethical Behavior

The length of time a right can be protected in practice may depend to some extent on the nature of the material and the interpretation of the law in different countries. However, if there is no law against plagiarism, it may be considered unethical and any serious precedent may be considered unprofessional conduct.

An organization can influence and distort the good intentions of an individual. Ferrell et al (1989), following research predicting unethical behavior, suggest that decisions about what behavior is appropriate in any given situation are influenced by the opportunities within the organization for an individual to behave ethically or unethically. . These opportunities are a function of the organization's culture, professional

The unethicality, and more strictly speaking, the immorality of their behavior is revealed in communication with subordinates, colleagues, contractors, administrative bodies, foreign partners, in the dominance of bribery and corruption.

The concept of image is widely used in the business sphere. This word itself means image, reflection, likeness, image. One of the definitions of image is a halo created by the opinion of a social group or a person’s own efforts. Image is closest to the concepts of reputation and good name. A person and a company can have both a positive, positive, approved, and negative image. Image is associated with the perception of either we perceive the bearer of the image as our own, trustworthy, whose behavior we approve of, or not. The image of a company is a factor of customer trust, growth in the number of sales, loans, and therefore the prosperity or decline of the company, its owners and employees. At the same time, the image is a dynamic phenomenon, and, like the impression of a person, can change under the influence of circumstances, new information, as a result of long-term communication. The image of a company depends not only on the products it produces, but also on its social responsibility, those forms of activity that society regards as positive, corresponding to pressing public interests and concerns. The image is created by long-term and focused efforts in the field of Public Relations (systematically planned activities aimed at forming the desired public opinion), in the field of advertising, in the field of customer relations, ethical behavior, and the formation and maintenance of reputation. Image is a fragile phenomenon; it is enough for a client to buy a low-quality product once or come across unethical behavior of a company employee, as its reputation in the eyes of the client plummets, and he himself, and sometimes his friends, are lost to the company (If you lie once, who will believe you). Therefore, the image of a company depends on each of its employees. If the company's employees perceive their treatment as bad, then this dissatisfaction will somehow affect their attitude towards customers, which undermines the company's efforts to create a positive image.

Can - and should - shareholders, acting through their agents, try to expropriate part of the profits from the company's creditors? Usually the answer to this question is negative. Firstly, such behavior by shareholders is unethical, and unethical actions has no place in the business world Second, if such attempts are made, lenders will protect themselves by inserting restrictive covenants into future loan agreements. Finally, if lenders determine that managers are trying to increase shareholder wealth at their expense, they will either refuse to continue doing business with this firm, or will charge it higher than normal interest rates as compensation for the risk of possible exploitation. Thus, a firm that does not play fair with its creditors is either deprived of access to the hired capital market or faces high interest rates on loans and other restrictions, both of these prospects are fraught with harm to shareholders.

For an organization's actions to be ethical, they must first be openly and unquestioningly adhered to by key officers. 35. In companies that persistently strive for high ethical standards, senior management enforces them through codes of ethics, speeches and publications, and policies related to the consequences of unethical behavior, their own actions and measures to comply with ethics. Senior leaders constantly remind employees that they have a duty not only to abide by codes of ethics, but also to report violations. Although such companies provide

Why are high ethical standards so important to the investment industry and investment professionals? As the 2008 global financial crisis demonstrated, seemingly unimportant individual decisions, such as approving loans to individuals unable to provide proof stable income, together could precipitate a market crisis that could lead to economic difficulties and job losses for millions of people. In an interconnected global economy and marketplace, each participant must strive to understand how his or her decisions and unethical behavior, as well as the products and services he or she provides, can affect not only the short term, but also the long term.

The investment industry serves society by matching those who provide capital or money with those who seek it to finance their activities. Consider those who provide capital—investors—and those who seek it—borrowers. Borrowers may be seeking funds to achieve long-term goals such as building or upgrading factories, schools, bridges, highways, airports, railways or other objects. They may also seek short-term capital to finance short-term goals and/or support their daily operations. Borrowers can be businesses, schools, hospitals, companies and other legal entities and individuals. Some borrowers will turn to banks or other lending institutions to finance their activities; others will turn to stock exchanges to gain access to the funds they need to achieve their goals.

In exchange for providing capital to finance borrowers, investors expect their investments to generate returns that compensate for their use and associated risks. Before providing capital, diligent and disciplined investors will evaluate the risks and rewards of providing capital. Some risks, such as a downturn in the economy or a new competitor, may adversely affect the return expected from an investment. To help evaluate the potential risks and rewards of an investment, investors conduct research, evaluate borrower capabilities, conduct competitive analysis, read official statements, examine management's business plan, research reports, and industry reports. Responsible investors will not invest their capital unless they trust that their capital will be used for their benefit. Investors and society benefit when capital flows to borrowers who can bring the most value from capital through products and services.

Cash flows are more efficiently distributed between investors and borrowers when financial participants have confidence that all parties will behave. Ethical behavior builds and strengthens trust, which has benefits for individuals, firms, and society, as opposed to unethical behavior. When people believe that a person or institution is reliable and acts in accordance with their expectations, they are more likely to accept risks associated with those people and institutions. For example, when people trust their money, they are more likely to invest their money and accept the risk of short-term price fluctuations because they can reasonably believe that their investments will provide them with long-term benefits. Entrepreneurs are more likely to accept the risk of expanding their business if they believe they can attract investors with necessary means for expansion at a reasonable price. The higher the level of trust in the financial system, the more people ready to participate in financial markets. Wide participation in financial markets allows the flow of capital to finance the growth of production of goods, provision of services, and infrastructure. All of this benefits society with new and often better hospitals built, bridges built, products produced, services provided and jobs created. Widespread participation in the financial markets also means that the need and demand for investment professionals is increasing, with the result that employment opportunities for those seeking to use their specialized skills and knowledge of the financial markets are also increasing.

Ethics always matter, but ethics are especially important in investing because the investment industry and financial markets are built on trust. Unethical behavior repels, ethical behavior attracts. Trust is important for all businesses, but it is especially important in the investment industry for several reasons. Reasons may include: the nature of client relationships, differences in knowledge, and access to information, as well as the nature of investment products and services.

In relationships with clients, investors entrust their assets to intermediary financial firms to provide intermediary functions and help in preserving their capital. If a firm and its employees fail to protect client assets, this can have serious consequences for everyone involved. Without trust and ethical behavior, intermediary firms would have no business.

Those who work in the investment industry have specialized knowledge and sometimes better access to information. Availability of special knowledge and better access access to information is an advantage in any endeavor, giving one side more power. Investors believe that the people they hire will not use their knowledge to harm them. They rely on an investment professional who uses specialized knowledge to serve the client's interests.

Another reason why trust is so important in the investment industry has to do with the nature of the products and services. Other industries such as transportation, manufacturing, technology, retail or food processing plants produce products and/or provide services that are tangible and/or clearly visible. We can hold the tablet in our hands and check it. We can use software, dine at chain restaurants and watch movies in theaters. We can judge the quality of a product or service based on many factors: How well will it perform its intended function? How effective is it? How durable is it? How attractive is this? Is the price reasonable or appropriate for the product or service?

In the investment industry, many investments are intangible and appear only as numbers on a page or screen. Without tangible products to verify and without any guarantee to protect the product or service to perform as expected, investors must rely on the information presented about the investment - both before and after purchase. When they contact their financial advisor and ask for an investment statement, they receive either an electronic or printed statement listing the transactions. They trust that the information is accurate and complete, and they trust the investment professionals they work with to protect their interests. The globalization of finance means that investment professionals are likely to have business opportunities in new or unfamiliar places. Without trust and ethical behavior, financial transactions, including global transactions, are less likely to occur. Unethical behavior can discourage counterparties from different parts of the world from interacting.

Due to these factors. This trust is created, maintained by the ethical actions of all individuals who work and/or work in the markets, including those who work for companies, banks, investment firms, sovereign companies, rating agencies, accounting firms, financial advisors and planners, and institutional and retail investors. When market participants act ethically, investors and others can trust that the numbers on the screen or pages of a report are accurate representations of information and have confidence that investing and participating in the financial markets will be profitable. Ethical behavior by all market participants can lead to greater participation, customer advocacy, and greater investment opportunities. Ethical behavior by firms can lead to more high levels success and profitability for both companies and their employees. Clients are attracted to companies with a reliable reputation, which leads to business growth, higher revenues, and greater profits.

There is another one - unethical behavior. Unethical behavior is an act that goes beyond what is considered morally correct or right for a person, profession, or industry. Individuals may behave unethically. Entrepreneurs, professionals and politicians can also behave unethically. Unethical behavior poses more threats in the investment industry than in any other professional field. And a number of factors contribute to this.

At the microeconomics level. Firms with ethical behavior may also have lower relative costs than those with unethical behavior because regulators are less likely to initiate costly investigations or impose significant fines on firms in which high ethical standards are the norm.

At the macroeconomic level. Unethical behavior erodes and can even destroy trust. When clients and investors suspect that they are not receiving accurate information or that the market is not playing field, they lose confidence. Investors with low trust are less willing to take risks. They may demand a higher return on their capital, choose to invest elsewhere, or choose not to invest at all. Any of these actions will increase costs for borrowers seeking capital to finance their operations. Without access to capital, borrowers may not be able to meet their goals of building new factories, bridges or hospitals. Disinvestment can harm society by reducing jobs, growth and innovation. Unethical behavior ultimately harms not only clients, but also the firm, its employee and others involved in the investment process. You can read an example of unethical behavior of a company in the article.

Reduced confidence in markets can reduce the growth of the investment industry and tarnish the reputation of firms and individuals in the industry, even if they have not engaged in unethical behavior. Unethical behavior impedes the ability of markets to channel capital to borrowers who can create the most value from capital that contributes to economic growth. Both markets and society suffer when unethical behavior destroys trust in financial markets. For you personally, unethical behavior can cost you your job, reputation and professional growth and can result in monetary fines and possibly jail time. The unethical behavior of a company poses a threat both to the person/company that undertook such behavior, and to subjects who were not directly involved in the process.

Questions to consolidate knowledge after reading the article “Unethical Behavior in the Investment Industry”

Question 1

Which of the following statements is most accurate. Investment professionals have a special responsibility for ethical behavior because:

A) the industry is highly regulated.

B) they are tasked with protecting clients' assets.

C) the profession requires adherence to its code of ethics.

Solution 1:

B is the correct answer. Investment professionals have a special responsibility because clients entrust them with protecting client assets.

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